HOMESELLERS: THE NAR SETTLEMENT AND WHAT YOU NEED TO KNOW
The commission lawsuits at the heart of the issue question how real estate commissions were structured and shared. Several lawsuits, primarily targeting the National Association of Realtors (NAR) and major real estate franchises, argued that the previous system unfairly inflated home selling costs. These cases challenged the practice where sellers paid not only their agent’s commission but also that of the buyer’s agent. This arrangement was said to maintain high commission rates industry-wide and limit competition, potentially violating antitrust laws. NAR has reached an agreement with plaintiffs to end the litigation. The new rules introduce more transparency regarding how buyer’s agents are compensated. These changes went into effect on August 17, 2024.
Here is what the change means for home sellers:
- We will no longer be advertising buyer’s agent compensation on MLS.
At the seller’s direction, we may communicate offers of compensation to buyer’s agents. Any compensation to a buyer’s agent from the seller should be agreed upon and documented at the time of the offer.
FAQs
- Are sellers required to pay buyer’s agent fees?
No. Sellers are not required to offer any compensation to buyer’s agents. - What would a seller want to compensate a buyer’s agent?
Many home buyers prefer to have an agent represent their interests in the home buying process. While buyers may choose to pay their agent directly, some struggle with the down payment or prefer to have cash on hand after closing for home repairs. By including the buyer’s agent fee in the transaction, it relieves the buyer of this additional financial burden. Sellers can evaluate any offer independently based on their net proceeds and terms. Offering a buyer’s agent fee or being receptive to it may reduce obstacles for buyers. Similar to home preparation and staging, this expense can expand the buyer pool and lead to stronger offers. - Will home prices go down as a result?
Home prices are determined by supply and demand, not by commissions. - Are real estate fees now cheaper as a result?
Previously, sellers often paid a lump sum to their listing agent, which included compensation for the buyer’s agent. The settlement "de-couples" commissions, creating more transparency between the two, but does not necessarily reduce them. - What about buyers who go directly to the listing agent?
When unrepresented buyers are interested in one of our listings, it is our practice not to enter dual agency and to continue representing the seller only. - Are there any advantages for a seller and listing agent to work with a buyer’s agent?
While a buyer’s agent has a fiduciary responsibility to their buyer, it is also their job to educate the buyer. Once price and terms are agreed upon, educated buyers who are familiar with market norms, conditions, and transaction steps tend to have a smoother transaction. Additionally, buyer’s agents handle various tasks necessary for closing the transaction. Listing agents may offer a discount on their total fee if another agent is sharing the workload. - Are fees now negotiable?
Yes, fees are negotiable, and they always were. There are no “standard” real estate fees. Brokerages and/or agents set their own fees. Buyers and sellers have the option to hire agents with varying skill levels, experience, and service offerings.